SNI - Scripps Networks Interactive

[Palantir]

This is a television and lifestyle company, and you might be familiar with their brands - Food Network, HGTV, Travel Channel. What stands out to me is that they have a decent niche in the food and lifestyle space, good growth, very strong free cash flow and over the past few years have leveraged up and bought back stock.

 

 

While I think they have a niche, I don't see obvious opportunities for expansion and growth, other than perhaps buying more channels. I have been looking at this stock on and off for the past year or so, but it's really out of my circle of competence, just don't really understand how this industry works, but perhaps this idea can be of use to others.

[pau_]

SNI is being acquired by Discovery for $90/share cash+shares (at current DISCK price)

 

I'm a shareholder in Scripps Networks and made a table of the possible outcomes if the acquisition goes through because there's a collar on the share consideration. Thought it might be useful to others as well. Weighing p(deal breaks) left as an exercise for the reader.

 

https://docs.google.com/spreadsheets/d/1ZY_ToDW-sNW3B5m5sQgZJzZg67KyOVfhcWYkSd-RsDw/edit?usp=sharing

 

(edit: updated to reflect comment by dwy000)

[dwy000]

One minor point pau_, I think the acquisition nets you the "C" shares of Discovery not the "A" shares.  DISCK trades about $1.25 less than DISCA today.

[pau_]

Thanks dwy000. I fixed the table and added some more downside to the range.